Is it necessary to defend the falling rate of profit theory?

[TheOneWhoKnocks]

So, Marx's assertion of the tendency of the rate of profit to fall is an exceptionally contentious aspect of Marxist political economy. From what I understand, the argument is that the need for individual capitalists to maximize productivity forces them to increase investment in capital relative to labor, so the cost of constant capital (e.g. means of production) increases while the amount of labor power (and thus the value produced by labor power) decreases because of the gains in productivity. But Marx also identifies several tendencies that can counteract the falling rate of profit, such as increases in the rate of exploitation, decreases in the cost of constant capital, and monopolization, among many others. So the law of declining profit only holds true when none of the countervailing tendencies are taking place.

Considering how many qualifications are necessary for the theory to be correct, I'm unsure that it is necessary for us to engage in that debate. Marx's point in developing that theory was to show that capital is limited by itself, which he already had demonstrated elsewhere, such as in his analysis of overproduction.

[Jimmie Higgins]

Well it's a "tendency" not a law. It's like saying that in developed capitalism there is a tendency for firms to monopolize, sure it is a tendency, but there is also a dynamic involved with what capital and labor subjectively do or attempt. So strike in large industries might counter this tendency as companies now want to break up their labor or bit to prevent a total strike at one major production site. Or capitalists might fight for anti-trust measures and so on.

So I think the falling rate of profit idea still holds - I think we see this in the tech industry, but the capitalists are always trying to find ways to counter this and so it's not a given that this will happen, but it helps explain some of the actions and decisions of capitalists. Why the speed-ups of the 1970s? Because profit rates were declining, for example.

Falling rates of profit is also tied into the Labor theory of Value, so maybe some of the controversy over these ideas are linked.

[Blake's Baby]

To put it another way, the 'tendency' is a 'law'... but there are countermanding tendencies. It still applies, but other things work against it.

Gravity (which could be called 'the law of the tendency for objects to fall to Earth') is still gravity, but aeroplanes are possible. The existence of machines that fly doesn't disprove the existence of gravity. It just means under some circumstances, the 'tendency for objects to fall to Earth' can be countermanded by stronger forces pushing in the other direction.